# k. Starbucks reports Income from Equity Investees in its income Statement. Using the narrative information provided in this case, describe the nature of this type of income.

These revenues correspond to the portion of the related companies that do not consolidate in the Financial Statement because there is a minimum participation or there is no control over them (Example: They have control with the 51% of participation). However, if they have a minimal portion this means that there is a minority participation, the portion of the gain that corresponds to it is recorded in the financial statements.

## Related Questions

It is estimated that a certain piece of equipment can save ​\$ per year in labor and materials costs. The equipment has an expected life of years and no market value. If the company must earn a ​% annual return on such​ investments, how much could be justified now for the purchase of this piece of​ equipment?

The amount that could be justified now for the purchase of this piece of​ equipment is \$73,747.41.

Explanation:

Note: This question is not complete as all the data in it are omitted. A complete question is therefore provided before answering the question as follows:

It is estimated that a certain piece of equipment can save \$22,000 per year in labor and materials cost. The equipment has an expected life of five years and no market value. If the company must earn a 15% annual return on such investments, how much could be justified now for the purchase of this piece of equipment?

The explanation to the answer is now given as follows:

To calculate this, the formula for calculating the present value of an ordinary annuity is used as follows:

PV = P * [{1 - [1 / (1 + r)]^n} / r] …………………………………. (1)

Where;

PV = Present value of the amount to justify the equipment purchase = ?

P = yearly savings in labor and materials costs = \$22,000

r = annual return rate = 15% = 0.15

n = Equipment has an expected life = 5

Substitute the values into equation (1) to have:

PV = \$22,000 * [{1 - [1 / (1 + 0.15)]^5} / 0.15]

PV = \$22,000 * [{1 - [1 / 1.15]^5} / 0.15]

PV = \$22,000 * [{1 - 0.869565217391304^5} / 0.15]

PV = \$22,000 * [{1 - 0.497176735298289} / 0.15]

PV = \$22,000 * [0.502823264701711 / 0.15]

PV = \$22,000 * 3.35215509801141

PV = \$73,747.41

Therefore, the amount that could be justified now for the purchase of this piece of​ equipment is \$73,747.41.

The question asks about the amount a company can justify spending on equipment, based on expected savings and a required rate of return. This requires understanding the concept of Present Value in financial calculations, using the formula PV = CF / (1 + r.

### Explanation:

The problem is related to the concept of Present Value in finance. Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return. In this scenario, the stream of cash flows is the annual savings in labor and materials costs due to the equipment. The return rate is the annual return the company requires on such investments.

To calculate the present value, use the formula:
PV = CF / (1 + r

Where:
PV is the Present Value
CF is the annual savings (Cash flow)
r is the annual return rate
n is the expected life of the equipment.

Plug in the given values into this formula to get the amount the company could justify for the purchase of this equipment. Do remember, the rate (r) is expressed in decimal, so if the annual return is say, 5%, use 0.05 in the formula.

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Use the following words to fill in the blanks in the statements below about the market for loanable funds. Choose from: demanded, supplied; left, right; higher, lowera. A change that makes people want to save less will shift the loanable funds _______ line to the ______. The resulting new equilibrium in the market for loanable funds would be a ______ interest rate and a ______ quantity of funds saved and invested.

supplied , left

higher, lower

Explanation:

When people start consuming more and saving less, this would result into lower quantum of funds parked with banks and financial institutions. Due to shortage of funds, the supply of loanable funds in the market would get reduced i.e the supplied line would shift to the left.

This would raise the equilibrium level for loanable funds which would lead to a higher rate of interest i.e funds will be loaned only at a higher rate of interest. Due to this, the quantity of funds saved and invested would be lower.

You are an upper-level manager in a firm. You believe that corporate objectives are not effectively disseminated throughout the organization and that line-level managers do not take them into account in their decision making. Which of the following would best help you to try to correct this problem? Multiple Choice Hold a series of supervisory manager meetings. Establish metric-based performance measures. Evaluate personality indicators to ensure inter-departmental worker compatibility. Evaluate and increase manager salaries and benefits.

Establish metric-based performance measures.

Explanation:

In the given scenario the line managers are not taking corporate objectives into consideration in their decision making.

As a upper-level manager can resolve this by introducing metric based performance measures that will show clearly productivity of the line managers.

The Key Performance Indicators should be tailored to the organisation's objectives.

The line managers that are not performing well according to the KPIs will need to align and perform better in the specific areas.

This is an effective way of disseminating the corporate objectives in the organisation.

To effectively disseminate corporate objectives throughout an organization, holding supervisory manager meetings, establishing metric-based performance measures, and evaluating and increasing manager salaries and benefits can be effective methods.

### Explanation:

In order to correct the issue of corporate objectives not being effectively disseminated throughout an organization, the best method to try would be to hold a series of supervisory manager meetings. This would create a direct channel for upper management to communicate these objectives to line managers. It also gives room for discussion, understanding, and eventual implementation of the objectives in their decision-making process. Establishing metric-based performance measures could also be useful in this context as it would provide a defined and quantifiable way to bring about desired behaviors in line-level managers by linking their performance indicators directly to corporate objectives. Evaluating and increasing manager salaries and benefits will also incentivize them to work in accordance with the corporate objectives.

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Evaluating strategies LO C2 If the company raises its selling price to \$240 per unit. 1. Compute Hudson Co.'s contribution margin per unit. 2. Compute Hudson Co.'s contribution margin ratio. 3. Compute Hudson Co.'s break-even point in units. 4. Compute Hudson Co.'s break-even point in sales dollars.

Instructions are below.

Explanation:

We weren't provided with enough information to answer the requirements. But, I will provide the formulas.

1) Contribution margin:

CM= selling price - unitary variable cost

2) contribution margin ratio:

contribution margin ratio= contribution margin / selling price

3) break-even point in units

Break-even point in units= fixed costs/ contribution margin per unit

4) break-even point in sales dollars:

Break-even point (dollars)= fixed costs/ contribution margin ratio

The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below:Sales \$939,000Variable expenses \$413,500Fixed manufacturing expenses \$525,500Fixed selling and administrative expenses \$353,000All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that \$215,500 of the fixed manufacturing expenses and \$126,500 of the fixed selling and administrative expenses are avoidable if product V41B is discontinued.What would be the effect on the company's overall net operating income if product V41B were dropped?

It would be a differential loss of 174,500

Explanation:

Continue Or discontinued

Continued    Discontinued Differential

Sales                     930,000            -                   (930,000)

Variable                    (413,500)           -                     413,500

Tracable Fixed Cost (342,000)           -                    342,000

Allocate cost           (536,500)      (536,500)               -

Result                   (362,000)      (536,500)       (174,500)

If discountinued, sales, variable cost and tracable fixed cost are zero

Tracable cost

215,500 + 126,500

Allocate cost

total fixed cost - tracable cost

(525,500 + 353,000)   - 342,000

Once we got the numbers we calculate the diffferential income/loss

Altogether the national, state, and local governments of the United States spend about a __________ of our gross domestic product.